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323248524804Technology a Sticking Point in UPS’s Labor Agreementhttp://transportationimpact.com/industry-news/technology-a-sticking-point-in-upss-labor-agreement/
Mon, 12 Feb 2018 14:23:00 +0000http://transportationimpact.com/?p=3128Continue Reading]]>Global freight services company UPS and the International Brotherhood of Teamsters (IBT) labor union have a long history of working together, with contracts dating as far back as the 1930s. The number of Teamster UPS staff has increased from a few thousand when the contracts started to more than 250,000 today. Negotiations are underway to initiate another national contract this year, which is the largest labor contract in the U.S.

The Current Contract

The current Master Agreement between UPS and Teamsters Package Division started on August 1, 2013, and expires on July 31, 2018. This contract outlines the following:

Guidelines for the size and weight of packages to protect Teamsters’ work and jobs

Limits the size of UPS SurePost parcels to 10 pounds and less than 3 cubic feet in size, with delivery to residences only

Agrees to a 46-hour workweek with wages compounded from the first general wage increase through the last

Gives employees with 35 years of service or more $3,900 per month in the UPS-IBT pension plan. A 30-year employee gets $3,400 per month plus $100 per year of service up to $3,900

Moves employees in the UPS health care insurance plan to TeamCare, which is trusted by the union and the employees

The two organizations have begun negotiations for the new contract, which covers approximately 250,000 employees. This includes small package and Freight drivers, inside operations sorters and loaders, and dock workers.

Al Gudim, UPS Labor Relations President, states: “UPS and the union have shared many objectives and our intent is to negotiate in an environment of mutual respect. We believe all parties recognize that taking care of our customers with reliable service is the key to maintaining a company that rewards our employees and provides excellent job security.” He also acknowledged the need for UPS to position itself for the rapidly changing industry.

Current Negotiations

UPS, which is the largest private-sector employer in the country, has hinted at what will come in this national contract though its negotiations with local and regional outfits. UPS has already asked for several concessions in these mini-contracts.

The beginning rounds of negotiations for the national contract are receiving a lot of attention due to the demand from the Teamsters that UPS not use drones or driverless vehicles for deliveries. This not only affects UPS but could have important implications for the use of automation in the transportation industry. While the Teamsters’ demands are only the beginning point of the negotiations, this is the first time a large company such as UPS has been met with such requests from a sizeable and influential union such as the Teamsters, which has 1.5 million members.

In addition to prohibiting the use of autonomous vehicles, the union is also asking for other concessions that will improve its members’ work life. For example, it wants UPS to add another 10,000 workers and to cease deliveries past 9 pm.

The Teamsters’ View

The labor union is asking UPS to not replace any of its drivers with autonomous vehicles in an attempt to save the jobs of all of its employees. The Teamsters presented UPS with a document that specifically requests that UPS commit to not using drones, robots, or self-driving vehicles.

The use of automation in place of jobs that humans conduct reflects a concern of many Americans. The use of self-driving vehicles and drones could threaten millions of American jobs. A Pew survey of 4,135 adults in the U.S. last year showed that 72% of respondents were worried about the automation of jobs, and 58% were in favor of government restrictions on the number of jobs companies can replace with machines.

The labor union is also pushing for safeguards that will allow workers to refuse to work in unsafe conditions or on overloaded trucks. The document states: “It is the company’s [UPS] responsibility to hire and maintain a sufficient workforce to service its customers without unreasonably burdening its employees. Management has consistently failed to fulfill its obligation.” This no doubt comes on the heels of a successful holiday season for UPS at the cost of its drivers and hub workers, many of whom worked 70-hour work weeks to get packages delivered on time during this busy period.

UPS’s View

UPS wants a flexible contract that keeps it competitive in the increasingly difficult logistics market. Since the two organizations last struck an agreement in 2013, there have been many changes to the industry, including the explosive growth of the e-commerce sector. To service this sector, UPS wants a contract that will allow for its growth and continued efficient delivery.

In an effort to improve the speed of delivery. UPS began testing drones from the roof of delivery trucks last year and plans to use them to get packages to remote locations that would require a long and costly trip by driver. Mark Wallace, an engineering executive for UPS, estimates a substantial savings if drones are used in rural areas: “The company estimates that it could save up to $50 million per year by cutting a mile off of every driver’s route each day.” This adds up to about 66,000 miles per day.

UPS is not the first carrier to test delivery by drone. Amazon has been transparent in its plans to deliver packages by drone. With the growing delivery volumes and shortage of truck drivers, all carriers are struggling to keep up with demand, leading them to explore new options for getting packages delivered to ecommerce customers.

Even though UPS is only in the testing phase with this technology, it is enough to raise eyebrows with the Teamsters union. Since the FDA still requires drones to remain within the sight of the operator, they would be unable to go very far from a delivery truck.

The negotiation of this new national contract between UPS and the Teamsters will certainly be under scrutiny from the entire logistics industry. Technological advancements will solve some of the challenges that face this industry, but public and regulatory concerns over their impact on jobs will continue to counteract them. Companies will need to work with their labor unions to mitigate the employee issues that come with implementing these technologies.

There are many areas that companies can look at to reduce small parcel shipping costs and improve their shipping process. Yet, many businesses still struggle to keep their small parcel shipping costs under control, especially with so few carriers to choose from.

At the same time, market leaders find technology to be a way to make the shipping process more efficient and cheaper. The tech available to companies nowadays does a lot more than just print shipping labels, which may be the most that a lot of shippers think it does. Logistics technology offers companies the ability to oversee every step of the delivery process and even helps to respond to hiccups along the way. At the same time, customers gain benefits through tools that allow them to do things like track their shipments and have access to more real-time information.

Parcel TMS (Transportation Management System)

A Parcel Transportation Management System is an automation tool that helps with the execution of small parcel shipments, providing the main benefits of optimizing spend and improving the delivery process. Leveraging a TMS, any shipper can coordinate and make shipping decisions based on quotes, items being shipped, transit time, and available carriers. A TMS also enables a shipper to track their packages and easily note any delays. And not only does it serve as a central location for all shipping information, it can produce customized reports for analysis — vital in this age of big data.

Here are some more specific benefits of a Parcel TMS:

Optimize Mode Selection

Systems like a TMS can help a company determine what mode to select for shipments from a cost and service perspective. For example, a company may choose a “2 Day Air” shipping option by default, but in some lanes Ground shipping will get the package there in the same time for a lower cost. A TMS will proactively identify these situations and help the shipper choose the best routing. These are decisions often made by routine, but the proper rate and service information should be evaluated for every shipment to cut down on expense.

Carrier Selection

Using only one carrier might be the convenient choice; however, that one carrier might not have the best prices for every shipping lane. Depending on location and type of shipment, another carrier might be able to offer both cost and service advantages. A TMS will provide cost and service information to choose the best route and carrier.

Improved Tracking

Technology enables every package a company ships to be tracked from the warehouse all the way through to the customer’s front door. Not only does this provide the customer with better service, it also serves as a safeguard for companies. In the past, when a customer reported a lost or damaged product, there were few ways to validate the claim. Companies can now use real-time scanning and tracking to see exactly where a package is throughout the entire supply chain, as well as get signatures and delivery receipts in real time.

TMS technology will provide a quick ROI for most any high-volume shipper. Shippers who move past the mindset of technology in the shipping process only being good for printing labels will find there are great process improvements and cost savings that come from it.

]]>3126Reducing Accessorial Charges for Small Parcel Shippinghttp://transportationimpact.com/industry-news/reducing-accessorial-charges-for-small-parcel-shipping/
Mon, 29 Jan 2018 16:38:27 +0000http://transportationimpact.com/?p=3122Continue Reading]]>Small parcel shipping is getting costlier by the minute. And still with so few viable carrier options, this is not a trend that will be changing anytime soon. According to a survey conducted by Parcel, many small parcel shippers are particularly concerned with the accessorial charges on their invoices. This makes sense given the amount of additional cost surcharges can add to any given invoice. It’s no surprise that over a third of respondents said that accessorial charges were their biggest concern with their primary domestic parcel carrier.

The Most Common Accessorials

Accessorial charges are additional services that a carrier provides outside of the standard shipping scope. These value-added service charges, or penalties in some cases, can add up quickly if you are not paying attention. They are often applied after the shipment has been made, making for a nice surprise on the invoice, and a substantial increase in transportation costs. This makes it difficult for a logistics manager to factor these costs into the supply chain budget.

But with over 100 different potential accessorial charges, how can a shipper be expected to keep track of all of them? The most common culprits for a higher invoice from your carrier include Dimensional Weight Pricing, Residential Surcharge, Lift Gate Service, Fuel Surcharge, and Additional Handling Surcharge.

Reducing the Impact of Accessorials

Accessorial charges make up more than half of carriers’ total annual revenue, which makes them very lucrative for the carrier and very costly for the shipper. Assessing freight costs, especially hidden ones, and how to control how often they occur is one way to reduce LTL freight costs.

Accuracy: Carriers are hoping that you will be careless, so they can hit you with a surcharge. Measure boxes and weigh all shipments and record them before you send the package off. That way, if there is a question about an accessorial, you will have backup.

Automation: Scanning equipment can be used to automate data entry with specifics such as weight, dimension, res indicator, etc. If your shipments cannot be read by a scanner, you’ll likely pay a fee.

Measurement: Figuring out the total cost of each package is a KPI (key performance indicator) that should be measured each week. The percentage that accessorials make up of the total cost per package is important.

Information: There are many reasons for an accessorial fee on a shipment, but giving your carrier updated information about your shipping needs and habits will cut down on the number of surprises on your invoice. This starts at the point of negotiation with the carrier so that what makes your shipping patterns unique is factored into the pricing agreements you operate under. This is the best way to prevent surprises down the road.

Auditing: Auditing every freight invoice to ensure accuracy takes time but is worth doing. A third-party logistics provider can intervene on your behalf to correct invoices if you are unable to do it.

A key point is that carriers assume that most companies do not plan for accessorial-related charges but optimizing processes and being accurate will cut down on your accessorials that are affecting your budget. An analysis of your shipping history and characteristics will identify the areas that should be focused on for improvement. Keep in mind that accessorial charges are negotiable so make sure you are not being over-charged for those instances when you are at fault. If you give them the frequency of occurrence as a percentage of your total shipping volume, they will be more willing to negotiate.

Parcel shipping is getting expensive. In reality, it already was costly and now it is even more so. The recent rate increase announcements from UPS and FedEx means that it will cost more money to ship in 2018. Reducing parcel shipping costs, without sacrificing service, has become a concern for many businesses. Profit margins continue to narrow for ecommerce companies meaning they will need to make sure that their parcel shipping strategy not only fulfills customer demands but also saves money.

Shipping Software

Technology can assist in saving money on shipping costs. Shipping software like a TMS (Transportation Management System) allows companies to compare shipping rates, print labels, and track shipments. TMS helps shippers understand their supply chain to optimize their shipping strategies. And since it is cloud-based, it is accessible from anywhere, anytime so you can forecast daily workloads for your staff, control inventory, and let salespeople know when a new item will be ready to ship.

Conduct a Parcel Audit

A parcel audit examines carrier invoices to check for mistakes between the actual shipment and the carrier’s invoice. Parcel audits can help catch costly errors that would otherwise go un-noticed. If a parcel audit is not conducted from time to time, you may lose out on recouping money, especially if you ship high volume. This can be done in-house, but outsourcing to an expert usually results in more savings in less time.

Renegotiate Parcel Pricing Agreement

While you might have been using the services from your carrier for years, it does not hurt to entertain quotes from other carriers. It will give you leverage when you go to re-negotiate your contract. You may even find that another carrier can offer you the same or better services for less money.

Before sitting down to negotiate better discounts, however, you should analyze your current service, usage, and expenditures. In addition to overall discounts and contract terms, accessorial charges should be negotiated as well. Concentrate on those surcharges that will make the biggest difference in your business.

Consider a Regional Carrier

A regional carrier or other small carrier, can offer the same service and delivery windows as your regular carrier, but for a fraction of the cost. Regional carriers, which serve specific regions of the country, are a good fit for shippers that have several distribution centers. Discounts can be up to 40% less than a national carrier so switching a portion of your business might be cost-effective.

Customer Shipping Options

There are several options on what to charge customers for shipping and the right strategy should cover most of your shipping costs. Customers want affordable and fast shipping, but it cannot be at the sacrifice of cost. While free shipping might be good for items that are low in cost, higher-priced or larger goods will be shipped at a loss so a minimum order price to qualify for free shipping will offset it. If you ship items that are similar in size and weight, consider a flat shipping rate.

With the right shipping strategy, controlling parcel spend is possible. Work with your carrier to find out how you can lower shipping costs based on your shipping profile.

Online shopper’s expectations for fast delivery continue to increase which has pushed small parcel carriers to create six or even seven-day delivery schedules. This is a substantial change for the logistics industry and one more example of how consumer demands are forcing retailers to get better at running their supply chain operations.

In the end, however, it’s up to the carriers (not the retailers) to make it happen. They know that creating new and better service options is necessary to maintaining customer satisfaction and keeping up with the competition.

Consumers Expectations Rise

Online consumers perceptions of shipping continue to change and e-retailers continue to try and keep up. According to a 2016 study conducted by Deloitte, only 42% of respondents considered 3-4 shipping to be ‘fast’ (as compared to 63% the prior year). The majority (83%) of shoppers characterized fast delivery as two days or less.

With online retailers looking for ways to get customers their purchases faster, it impacts their bottom line. Expedited shipping requires efficient warehousing processes as well as good relationships with their carriers. While it adds expense, it’s a cost of doing business that retailers know is necessary to keep customers happy.

UPS Ground on Saturdays

Luckily for retailers, small parcel carriers are stepping up their game. To meet customer demand, and keep up with its competition, UPS has announced that it will begin accepting and delivering ground packages on Saturdays in certain large metropolitan areas. Some customers will also be able to ship packages on Saturdays for a Monday delivery. This service will be available for more than half of U.S. residents this year, with more in 2018.

You Might See a Mail Truck on a Sunday

With Saturday delivery becoming more commonplace, what about Sunday delivery? As it turns out, Amazon and the USPS already have that covered. The U.S. Postal service has been delivering groceries and other items for Amazon since 2014. This partnership is allowing Amazon to deliver seven days a week in many areas. And this service is not available just for Prime subscribers, it is across the board.

As for the USPS, it’s also begun Sunday delivery for other companies, so the seven day-a-week delivery schedule will soon be an option for all online businesses.

Get a Shipping Strategy

Of course, no other online retailer has the leverage and scale of Amazon. But a shipping strategy that includes a mix of carriers is likely the best way to keep shipping costs affordable but also get access to the widest range of shipping options – including seven day-a-week delivery.

Retailers of any size should be wary of getting stuck into carrier-specific software or in any way limit their ability to compare carrier costs and service levels. And, do not dismiss the USPS as an option. USPS rates are often lower depending on package size, and their tracking is much improved – not UPS and FedEx level, but it is better than many companies realize.

The bar continues to rise in terms of what is an acceptable delivery time for online purchases. It won’t be long before a weeklong delivery time is obsolete – and seven day-a-week delivery the norm – regardless of the carrier make the delivery.

This is part two of a two-part post. Here are more ways data can be used to improve a logistics operation.

Better Decision-Making

Data can also support better decision-making within the logistics function and other parts of the supply chain — and it goes beyond the obvious importance of choosing the cheapest carrier to minimize shipping costs, which we covered in Part One.

A prime example is that it’s common for companies to pay for service levels they do not need. A quick review of shipment history will often show a large percentage of orders are sent at unnecessarily fast service levels. Most commonly, shipments are sent next-day or second-day air when ground service will get it there just as fast. Adding insult to injury is that the carriers know when this happens and purposely send these types of shipments through their ground network. It’s cheaper for the carrier, but they do not charge any less, of course. It’s on the shipper to figure out when this is happening and make better choices to prevent it.

The line between whether a shipment should be routed LTL or small parcel is another area where many shippers need to make better decisions. It’s because most have arbitrary cut-offs (like anything over 200 lbs.) to decide when a shipment becomes large enough to ship with a common carrier. The problem is this choice is not a one-size-fits-all decision. Rates, lanes, and product type all go into determining the best way to ship something, and opportunities for finding better ways are illuminated when the data is looked at closely.

The intent with these examples is also to show that getting value out of data is really a process. Data analysis helps identify the problems. KPIs and dashboards can then be used to keep processes on target. And future decisions are improved by using benchmarks to measure improvements.

Strategic Planning and Resource Utilization

In the past, companies used data analytics to confirm decisions already made. Now, a shift in mindset is needed to forward-looking data analysis to drive future decisions. Strategic decision-making in the logistics supply chain often involves comparing “what-if” scenarios and other hypotheticals, with the goal of improving efficiency as well as utilization of resources.

Historical data like shipping patterns and costs — as well as seasonality — provide benchmarks that enable shippers to compare new shipping options and alternative strategies.

For example, determining the location of potential suppliers or other distribution points can be done by modeling shipping costs to and from those locations. Similarly, as shipping rates change (for better or worse), the cost impact can be determined with certainty and budgeted for under various scenarios.

Data can also enable better capacity planning for shippers. This can include optimizing warehouse personnel levels needed during the business peak season, or maximizing capacity utilization for equipment to improve the load factor on trailers.

Taking a few small steps to identify basic KPIs and other metrics that can help improve a logistics operation is not hard. Using the data already available within an operation will also lead to more and better ideas for how it can be used. Most importantly, as improvements come so will confidence — along with a willingness by the company to invest more to achieve bigger and better benefits.

The following is part one of a two-part post detailing the key ways data can be used to improve any logistics operation.

Logistics is a ‘data-rich’ function. Each shipment contains valuable and actionable information that companies can use to reduce their shipping costs and improve the service they provide to customers. The problem is few companies are using this potential to their advantage.

The reasons for it may vary, but clearly there is a large missed opportunity for companies. With all the talk about big data, it’s hard to image any logistics professional unaware of the value of data and data-related tools like KPIs and dashboards. So why are most companies failing to use the data they already have?

Realistically, this failure is likely a lack of tools or simply not knowing where to start. Getting company buy-in to invest in the time and technology that can enable a logistics operation to use its data is not easy. Neither is finding internal employees with the skillset to make good sense of it.

But, the point can’t be lost that there is real value in the data from every logistics operation. To help you get started, here are three ways any company can use the data it already has to improve how the entire company, not just shipping, functions. Each will likely also open doors to additional opportunities that may not be obvious initially.

Improved Profitability

Every shipment comes with a cost, of course. But shipping and supply chain expenses are often what make or break a company’s profitability. Metrics of the cost to service customers provide valuable insight in many ways. Obtaining this insight starts with identifying what’s important to measure, and then setting benchmarks. It’s this baseline that enables the impact of data-driven changes to be understood and improved upon.

This type of cost management is especially complex in the ecommerce space, where customers often expect fast, free (or at least VERY low cost) shipping on orders. This forces companies to use shipping cost as a loss-leader a lot of the time. But, just because a company knows it’ll lose money on shipping does not mean costs don’t matter. On the contrary. When money is lost on every shipment, understanding margins becomes even more important.

As another example, measuring freight cost as a percentage of sales is a way to identify potential low-margin or money-losing customers. Shipping costs are always dependent on a lot of variables, like distance and weight, but these are more easily quantified and predictable. There are other customer-specific costs that are often not tracked or understood, like accessorials or additional handling. These are things often not considered on an individual customer basis but go al ong way in determining profitability of customers – or those that have a negative margin.

Data can be used to support strategic business decisions, like comparing different shipping scenarios. Optimizing the location of suppliers, as well as manufacturing and distribution points, has a big impact on shipping costs. Shipping history data can be used to analyze the impact on logistics costs of changing suppliers. Or, the potential benefits of adding an additional fulfillment warehouse to ship customer orders from.

Looking closely at cost data enables a company to develop several other important insights. In part two of this post, we’ll explore two additional ways companies can use data from their logistics operations to improve their entire operation.

If your company has noticed an increase in the dollar amount of your shipping invoices over the last few years, dimensional (DIM) weight pricing might be to blame. In 2014, UPS and FedEx began charging for shipments based on DIM weight. This pricing change had a significant impact on companies that ship large, lightweight residential and commercial packages. It was not long before other carriers started rolling out this type of pricing.

What Is DIM?

Dimensional weight pricing enables carriers to price based on package volume, the amount of space a package takes up in relation to its actual weight. This discourages shippers from sending large parcels that contain mostly air or light packing materials, which is unprofitable for carriers since these types of shipments take up a lot of room.

DIM is a calculation of the length multiplied by height and width and divided by a DIM factor. The DIM factor is a constant number that is set by the carrier. The billable weight is either the dimensional weight or the actual weight, whichever is greater.

LTL Follows Suit

Following UPS and FedEx’s lead, many freight companies now use DIM to calculate the price of lightweight packages, especially for LTL (less-than-truckload) service. The use of DIM weight pricing in LTL services has created freight classes that are determined by weight and the space occupied on the delivery truck. This eliminates the age-old issue for LTL carriers in which lightweight packages take up space in the trucks, but cost way less to ship.

Many carriers, such as FedEx Freight, YRC Worldwide, and Old Dominion, are investing in three-dimensional size measurement capturing machines that will more accurately charge shippers based on the dimensions of their shipments.

With volume playing a bigger role in LTL shipping, costs have risen by 20% or more for some shippers that use LTL carriers. When added to the annual base rate increase, fuel surcharges, and other fees, shipping fees have increased by 30% for some.

DIM Weight Pricing Benefits

The growth of the e-commerce market combined with driver shortages has left many carriers with serious capacity issues. The expectation is that this pricing model will alleviate some of the hits carriers have taken in recent years.

Carriers view DIM weight pricing as a way to encourage shippers to use efficient packaging and maximize the use of existing capacity. Some carriers have even allowed shippers access to their packaging research to help them optimize packaging. This pricing model is also a way to cut fuel costs and ease the burden on an already taxed trucking industry. This is on top of the anticipated revenue from the profit the price increase will bring.

Dimensional weight pricing will eventually spread across the majority of transportation methods. The reduction in fuel costs, vehicle emissions, and transportation costs will be seen by many carriers as an incentive to adopt this pricing method.

Not waiting until the start of the New Year, some of UPS’s rate increases will take effect starting in December 2017. With the growth of ecommerce and B2C shipping volumes, UPS placed its increases on the services these types of businesses use most. And, by raising rates before the start of 2018, the company will be poised to take advantage of the holiday return and post-holiday shipping rush. UPS feels that the raised rates are needed to meet the increasing demands of ecommerce businesses and quicker delivery turnaround times of their customers.

Shipping Costs

While shipping costs are going up by 4.9% on average, SurePost, which is the service that partners with the USPS, will be seeing higher rates than the other services. The most significant increases are focused on Air shipments, particularly for the higher-zone shipment types. With the minimum rates for SurePost exceeding those for Ground services, the marketplace feels that the reliability of the USPS is acceptable, or it’s not willing to pay premium prices.

Shippers can also expect to pay more for small packages, as the DIM weight advisor for packages measuring < 1 cubic foot will decrease from 166 to 139, putting UPS on equal ground with FedEx. This makes it cost-prohibitive to ship larger, lightweight packages.

Service Minimums

UPS is looking to drive more revenue from both surcharges and services, particularly in the 2- and 3-Day services. The more substantial Service Minimum increases that are focused on 2- and 3-Day services indicates that the company’s Ground network is becoming more efficient; the volume of packages in those lanes serviced with Ground, as opposed to Freight, is growing. Shippers are also getting savvier about their shipping choices, using Ground for 2- and 3-day shipments so they do not have to pay premium rates. By increasing the cost for these services, UPS is able to protect its margins with Air service that is needed to meet a 2- or 3-day commitment.

These increases, just like the company’s Peak Season Surcharges, indicate that UPS is ready to capitalize on the ecommerce market. Those ecommerce businesses that ship large and cumbersome packages will pay a premium. Shippers will be forced to review all of their shipping profiles and analyze how these changes will affect their shipping budgets into 2018. Modeling your shipping patterns with the new rates will give your company insight as to how these rates will impact your bottom line, and what changes you will have to make with your shipping carriers.

Every logistics manager knows the importance of their carrier relationships. A lot is riding on your carrier—protection of your goods, budget, on-time delivery, and your customers’ satisfaction level. When it comes to negotiating a parcel contract, many logistics professionals take pride in being able to negotiate the best shipping

Because they do it every day, carriers know their way around a contract. After all, it is under their terms, and the success of their company is dependent terms and rates; however, don’t discount the idea of having a third-party consultant help with your small parcel contracts. The information they have access to can make a significant difference in your rates. on how well they can negotiate. Shippers, on the other hand, don’t have nearly the same amount of experience with contracts. But skill level comparisons are not really the issue; it’s about who has access to the most accurate and relevant information that will give them the upper hand. In 99.99% of negotiations, it is the carrier.

Shippers who negotiate alone are at a clear disadvantage, but using an outside expert is one way to be on a level playing field with carriers. There are several ways in which a consultant can provide value during the negotiation process.

Market Rates

Each and every shipper wants rates that are competitive, and wants to make sure they are not overpaying for their shipping services. However, shippers have no knowledge of where market prices are, but a third-party expert who sees a lot of contracts, does.

Market Trends

Market trends will affect your contract negotiations, but unless you regularly invest a lot of your time following them, you will be at a disadvantage. For example, the recent GRI announcements will affect your small parcel rates, but understanding exactly how is difficult. Knowing the long-term influence on the market and how to plan for it is even more difficult, yet contracts are based on where the industry is going, not where it is today.

Cost of Doing Business

While it is important to know what the going rates are, it is just as important, if not more so, to know what the carriers’ costs are to service your business. Since your company has its own routes and volumes, competitors’ rates are only part of the equation. A carrier’s costs matter more in pricing models and their strategy. An expert who understands this can guide you to what you should be getting from your negotiations.

From a shipper’s perspective, lower rates are the ultimate goal of small parcel negotiations. A shipping consultant can give you access to key information to put you in a better position for your negotiations. Obtaining access to this valuable information is the only way to get the competitive rates you want.